Step 3: Financial Disclosures
Next your mission is to prepare and serve your disclosures within 60 days from filing the Petition or Response.
Quick Tip: Extend this deadline by agreeing with your spouse in writing (email should be sufficient). If you do not make the deadline, you don’t need to expect a bomb to drop. You just might get your spouse (or their attorney) to gently (or not so gently) nudge you. If you really delay, you might end up having to go to court to explain yourself. Worse, you could be ordered to pay some of your spouse’s attorney fees (if they have one) since they had to go to the trouble of seeking help from the court.
This step forces you and your spouse to truthfully represent your complete financial picture so that it can be fairly divided during Step 4. This complete financial picture must include income, expenses, assets and debts. We’re not going to lie — it’s a lot.
Even if you already have a full agreement with your spouse (amazing but not likely at this point), this step is mandatory.
Be Thorough and Honest
One role of the financial disclosures is to help prevent fraud (i.e., the cheating of you or your spouse out of something rightfully yours).
That said, if you don’t disclose everything on your forms, you run the risk of either missing something that later has to be addressed post-divorce (and you don’t want to have to do this again, right?) and/or your being accused of “breach of spousal fiduciary duty” (failing to be fully transparent with finances).
Quick Tip: The fancy (legal) word for disclosures is “Preliminary (or Final) Declaration of Disclosure” or PDDs. Disclosures and discovery responses become both negotiation and (if necessary) trial tools.
Quick Tip: If you or your spouse did not file a Response back in Step 1, the person who did not respond does not have to prepare disclosures.
Note: The Family Code imposes an ongoing duty of disclosure about activities that materially change your assets, liability and/or income. If something changes significantly (for example, your car was in an accident or your investment portfolio drops or skyrockets in value), you must notify your spouse in writing.
Before you start filling in the forms, check out the resources below to get a primer in what is community property (CP) vs separate property (SP). Remember, some assets may be both CP and SP. For example, if you contributed to a 401k before and during your marriage, the account is both CP and SP.
You are required to exchange court forms that disclose complete information about your income (from all sources), expenses, property and debts. Even if you already have a full agreement with your spouse (good for you!), you still must exchange these documents.
- Declaration of Disclosure (FL-140)
- Income and Expense Declaration (FL-150)
- Schedule of Assets and Debts (FL-142)
- Declaration Regarding Service (FL-141)
While only Form FL-141 must be filed with the court, we recommend that you also file FL-150 since you have to complete it anyway and it will likely be required down the line. Forms FL-140 and FL-160 are necessary not because they have to be filed with the court but because they help to guide you as you fill out the others.
Breaking it Down
Form FL-140 must be executed under penalty of perjury (that means you have to tell the truth). If you lie (or leave out assets and/or debts), this could be grounds for a “set aside” (dismissal) of your divorce judgment. You may also have to pay fees (called “sanctions”). So, please pay close attention as you complete these documents!
Quick Tip: At this stage of the game, you need to check (at least) boxes 1-3 on FL-140 and attach your last two years of tax returns.
The FL-150 is not only required for your disclosures, but is also used by the Court and your spouse during Step 2. While you do not need to file your FL-150 as part of your disclosures, we usually recommend that you do, since the Court will likely not approve your final Judgment for Divorce if you haven’t filed an FL-150. Additionally, if you’ve filed an FL-150 and you (or your spouse) later files a Request for Order (Step 2), you do not need to prepare a new FL-150 if you filed one within the last 90 days and there are no material changes to your income or expenses.
Quick Tip: Remember, when filing a document, you must make two copies for a total of three. If you are filing the Income and Expense Declaration as part of your disclosures, you do not need to do a Proof of Service like in Step 1 and Step 2. Instead you will use FL-141 (see below) to evidence service (delivery) of all of the disclosure documents.
Form FL-142 must identify all assets in which you have an interest and all liabilities or debts for which you may be liable, regardless of whether the asset/debt is community, or separate (or part community/part separate). You must set forth your characterization of each asset or liability and attach documentary proof. So, for example, if you have a bank account with a $2,500 balance, attach a bank statement indicating such.
Quick Tip: While not required, we recommend attaching financial documentation showing the present date and date of separation balances (if they are far apart in time). While present day balances are required, date of separation balances are sometimes more relevant to negotiations. For example, if your bank account was $500 at separation but is now $10,000, the higher figure is likely a result of deposits from your employment earnings post separation. Since those earnings are usually separate property, showing the date of separation balance will be helpful in negotiation so your spouse is (hopefully) clear that they are not entitled to 50% of the $10,000 balance.
Finally, FL-141 is the document that does get filed with the court. It’s essentially a Proof of Service like in Step 1 and Step 2 and demonstrates to the Court that you have served your disclosures and are ready to proceed towards Judgment of Divorce (Step 4).
Once you’ve completed the above documents and served them to your spouse (mail is sufficient), complete FL-141, make two copies (for a total of three) and mail it on to the court for filing. If you want a copy mailed back to you, be sure to include a self addressed stamped envelope.
Start with Our Divorce Worksheet
Our Divorce Worksheet is designed to help you think through all of the different assets and debts that you need to list on these forms. Start by working your way through it and then tackle the forms. It will also help you start thinking through the other issues that will need to be addressed in Step 4 (child custody and spousal support for example).
Coordinating with Your Spouse
It’s possible that you will need to ask your spouse for documentation or information in order to complete this step. We recommend that you start with simply asking your spouse for what you need.
If they refuse, a quick (and easy) way to get more information from your spouse is to mail them Form Interrogatories. If you run into trouble, consider booking a half hour coaching session with one of our attorneys; there are plenty of other tools we can suggest to help you through this process.
Sometimes your spouse does not prepare complete disclosures. It will be up to you to get the information you need. Even when the disclosures are prepared properly, they sometimes lack information or documentation that you may need (e.g. proof that a downpayment on your house was from a separate property source, contributions made to a retirement account during the marriage, location of funds that were received as a result of a refinance, etc.).
DIY The Strategic Way
Our templates and videos will walk you through this process and make sure you consider the issues at hand.
Allow us to assist you by preparing your documents, advising on your unique situation, or reviewing the documents you prepared before you file.
You’ve completed your financial disclosures.
Now, on to Step 4 – Negotiating your Agreement and finalizing your Divorce Judgment.
Questions? Feeling overwhelmed?
We get it. At any point, schedule an affordable and convenient meeting with one of our excellent legal coaches.